Episodic advice to fill the unmet financial advice need might not be financial advice in the holistic sense given a “cut down” version of advice would cost just as much as holistic advice to service due to rising compliance, according to IOOF.
IOOF chief executive, Renato Mota, said episodic advice, scaled advice, or financial wellbeing services could include coaching or budgeting and needed to be largely digital in nature and have a much lower price point.
“Financial wellbeing is not a cut down version of advice because I think if you look at it as a cut down version of advice you end up with a problem that it’s actually still too expensive to service,” he said.
Mota said the industry needed to start with a blank sheet of paper on what this kind of advice looked like.
“If you’re starting from scratch, with a view of helping to coach people helping to improve literacy, helping them make better decisions in a digital native way, how would you do it?” he said.
“You can still help people with the skills we have – you just can’t get into their personal circumstances, and you can’t provide strategy or product recommendations. But there’s still a lot you can do.
“Product recommendation is not at the heart of financial wellbeing or financial advice. What is, are decisions that we can control in respect to financial affairs.”
Mota said this included understanding financial affairs, coaching, budgeting, understanding risk profiling, and helping people engage and have more confidence around their financial affairs.
“For many people financial wellbeing could be the difference between getting something or getting nothing at all,” he said.
“I think getting something will help them will help build their confidence, and possibly over time then choose to engage with advice.”
He said a lot of this episodic advice, or financial wellbeing service, would be delivered digitally such as podcasts or webinars.
Mota noted IOOF had established an incubator business that looked to explore how this service could work.
“With our business now, with MLC, we’ve got a million unadvised members in our products, so we can digitally engage with them. There’s a lot of things that can be done – we can partner with our self-employed advisers in doing that,” he said.
“We can make the content more geographically based, and actually look into thematics that are more relevant to some geographies for some professions than others. There’s a lot of ways you can customise this content in a way that is more meaningful to the client and actually engages with our community.”
Mota said the firm would launch the first version of its incubator financial wellbeing business later this year.
